Self-disruption gains force at retail
Industries have lined up like bowling pins. Taxis. Media. Entertainment. Hotels.
Being disrupted is such a common occurrence in today’s business world that for any particular industry, it’s not a question of if, but when. That’s a fact retailers know well, having been on the receiving end of disruption.
Increasingly for some, there’s more talk about responding with efforts to disrupt themselves. These companies are reexamining their own businesses before they are blindsided by outsiders.
Self-disruption isn’t a brand new concept — Apple and Amazon often have been cited for their ongoing self-disruption efforts to drive innovation. There are consultants who instruct leaders in how to reimagine their industries and organizations. Self-disruption has a masochistic sound to it, but it’s more about absorbing some pain today to head off potential demise tomorrow.
Speakers discussed the importance of self-disruption in late November at the annual DSN Industry Issues Summit in New York, where executives cited examples in health care, retail and other segments, and expressed the urgency to move quickly.
There is a common refrain from emerging technology companies that would disrupt an industry such as health care, said panel moderator Chris Dimos, who is president of retail solutions at McKesson. “I am the Uber for health care, I am the Lyft for health care. I’m going to revolutionize health care.” These challenges need to be taken seriously, and more retailers are aiming to act earlier rather than later.
Ryan Rumbarger, vice president of pharmacy operations at CVS Health, said the challenges go beyond just health care to impact a range of new consumer demands from retail. “Consumers are demanding more convenience, so we think about how do we disrupt ourselves before we get disrupted,” he said. “When we decided to go nationwide with delivery, it was because we said, ‘We’ve got to get ahead of things, and meet our patients when and where they need and want us.’”
The challenges inherent in self-disruption can be daunting. The fact is, emerging companies aiming to disrupt don’t have all the constraints of more established entities, including the extensive infrastructures. That’s a big advantage that makes newer players nimbler. So how can established, traditional companies effectively disrupt themselves? A single formula doesn’t exist, but there were some compelling ideas cited by panelists. One is the need to commit to massive change that may be painful in the short-term, but hopefully beneficial down the road.
Another strategy is to borrow from successful retailer efforts elsewhere in the United States and in other countries. Some traditional retailers are moving beyond their comfort zones in this way, finding innovative examples to emulate. It’s even better if those examples already exist in-house. Walgreens’ Rina Shah, vice president of pharmacy operations and specialty, said her company can benefit by leveraging some best practices from United Kingdom-based sister company Boots that continues to innovate in wellness and beauty. It’s also essential for retailers to think more like the start-ups they aim to head off. What do these start-ups do really well? “They are absolutely obsessed with the customer and what that customer experience needs to look like,” said Clay Courville, vice president and general manager at McKesson Pharmacy Technology and Services.
Finally, it’s not enough to aim for self-disruption; you have to execute on it well. This requires a regular recommitment to the mission, doing whatever it takes to move it ahead. You can’t do this without having people on board who embrace a disruptive mind-set.
Once a retailer is well on the path to self-disruption, there’s an opportunity to reintroduce its organization to customers in compelling ways, with new kinds of stories. That’s the point at which you know pain is turning into gain.
David Orgel is an award-winning business journalist, industry expert and speaker. He currently is the principal of David Orgel Consulting, delivering strategic content and counsel to the food, retail and CPG industries. To read last month’s column, click here.
Editor’s Note: Walmart’s back on top
Six months ago, the sky was falling directly on the proverbial head of Walmart. While company earnings were okay, Wall Street was concerned about a dropoff in online business. Walmart stock tanked by about 20% over a few days.
On Thursday, the company announced its latest results. Guess what? It is back to being the darling of Wall Street again, with some calling the financial results the best in a decade. Today, the stock price is up by about 10% and, with the company raising its guidance, it could set new records in coming weeks.
The bottom line is that Walmart is doing many of the right things needed to compete with Amazon and the consumer is noticing. This is a chain on the rise again and few people should think otherwise.
As spring approaches in Wisconsin — finally — it’s always a great time to renew, refresh, and, for me, rearrange some furniture. There’s something about a “winter arrangement” that keeps my living room chairs situated for cozier and more intimate conversations. However, come spring, I look for ways to open up the room a bit more and let in more of the sun’s glow and warmth.
As I considered more “ideas I haven’t thought of” themes for this series, I felt that a spring cleaning within a retail setting can be an important part of keeping store displays fresh and consumers and staff motivated. Rearranging the “furniture” provides the opportunity to enhance the overall layout, refresh fixtures and displays, and update the operation to enhance the shopping experience and bolster sales.
I’ll be the first to admit that adjusting a retail setting merely for the sake of adjustment often falls flat on its face. Not only will a haphazard approach lead to shopper confusion, it may equally frustrate the retail staff. However, walking through the primary entrance of any retail setting with a fresh set of eyes and open-mindedness can lead to tremendous results.
Here are five things I recommend be considered…and they are the same five things I take stock of before rearranging my living room furniture.
Establishing a goal
Before simply moving the furniture in my living space, I consider what I hope to accomplish. Is it to move things away from the walls, incorporate a new focal point piece of art, create conversational areas, etc.? Similar characteristics should be acknowledged when assessing retail space. If the goal is to reduce a claustrophobic feeling, then adjusting inventory levels and the number of fixtures may be the solution. If the goal is to increase visibility across the store, then lower fixtures may help. Perhaps the goal is to allow shoppers easier movement from section to section and across the entire store layout, so angles and shorter gondola runs may meet the objective.
Consumers form an impression of a retail space within seven to 10 seconds. (In the case of my living room, it took my daughter about five seconds to say what she liked and what she disliked!) If you want shoppers to feel energized, does your initial appearance match? If you’re hoping that customers pause for a moment or navigate a certain direction, does your store design provide that opportunity?
Shedding some light
For me, I’m a fan of well-lit retail spaces flooded with natural light, where possible. Especially given our aging population and deteriorating eyesight, ensuring adequate lighting has become a necessity. Think back to the last time you rearranged the furniture in one of your rooms. How important was getting the lighting just right? Why is it any different on the retail floor?
Freedom of movement
Fluidity in arranging furniture in my home is important. In other words, I’m ensuring that my guests can easily get to a comfortable chair or couch and not have to hurdle hassocks, coffee tables, or other disrupters. I cannot tell you the number of times that I’ve become frustrated at a retailer who expects their guests to clear/jump/leap displays or vault pommel horse past sale merchandise. Of course, there is a fine line between making the space seem too sparse (however, minimalistic retailing is on the rise) or overcrowding the area to the point where it is like walking through an unkempt closet.
Line of sight
In my open-space concept at home, I want to ensure that if I’m on the opposite side of my kitchen or near the breakfast bar, that I can still maintain eye contact and conversation with my houseguests. Putting up barriers that prevent this line of sight is unthinkable. So, why is it that many of the retailers I visit have displays that are far too high, obscuring the line of sight across the store, or configurations of displays that make it non-conducive to have a conversation?
After a long winter, shoppers are looking for just about anything to brighten their day. Whichever goal you are adjusting your “living space” to achieve, moving, changing, or altering fixtures can invigorate in-store traffic and sales.